Wendy Nunnelley is a beverage industry executive and an angel investor in more than 20 early-stage companies, primarily in consumer goods and services. She is a Senior Vice President at Diageo and was previously a Vice President at The Coca-Cola Company, with experience in strategy, planning, operations, business development, and revenue management, including pricing/promotion. She is on the board of Naturally Austin and advises several early-stage companies. Most of her investments are in minority and women-founded companies, and she often works with emerging brands that serve underserved consumers or are oriented towards health and wellness.
CPG industry executive + angel investor
When most people approach the development and marketing of a food product, they focus on the product itself—how it tastes and the appeal to the consumer. The work that you do emphasizes a much larger picture around selling food products. What is the symbiosis that has to occur between the product, its packaging, its pricing, and even the shelf that it lands on? Tell us a bit about how that all works together.
When I communicate with founders of [food] companies, I say: Of course, your product has to be great. It has to taste great, the branding has to be great and it needs to be appealing to your target consumer. But you also need to think about a much larger chain of events to get your food product into the stomach of a consumer. If you are a small brand, you are probably going to need to go through a distributor, and then they are going to sell your product to a big retailer. From there, you need to ensure your product shows up on the shelf the way you want to, so that when your target shopper walks in the door of that big retailer, they encounter your product and want to buy it. You also have to consider how your product appeals to the retailer and creates value for them (not just for the consumer). It is much more complex than just having a great product.
In the instance of impact-focused food products, is there a particular strategy for getting people who care about the impact to encounter it and want to buy it? How does pricing factor in?
There are different stories that the shopper needs to be told in order to want to buy your product. When you think about impact-oriented [food products], the great thing is that those values are at the top of mind right now both for retailers and for shoppers. So you can be very overt about the impact, which gives you options when you position yourself to get into a store and to get your product in front of the type of shopper cares who about an impact-oriented product.
If you have a story and a real impact, but you are priced the same as all of the other products, you're not communicating the right thing about your brand.
For example, let’s say your product is a potato chip that has some impact-orientation because the farmers growing the potatoes are empowered or are owning their own land. How do you get your potato chips to the right place in the store where somebody is going to understand that impact and want to buy the product? You probably are (and should be) charging a higher price. Your price communicates a lot about your brand—if you are priced quite high, that has a halo that says “Wow, there must be something special about this brand.” There's a limit to that, of course—you can’t go too high or consumers won’t actually buy it. But you also don't want to price too low, because that actually communicates that your brand is not special. If you have a farmer story and a real impact, but you are priced the same as all of the other potato chips, you're not communicating the right thing about your brand.
In addition to pricing, what role does placement play into a food business's strategy? How does the specific spot where your product ends up in a store communicate information and manifest your brand in a consumer’s mind?
Positioning is really crucial. Going back to our potato chip example, [we can consider how] placement in a store would work: Is your target consumer a person who goes to the potato chip section all the time, and now we're giving them something that's a better alternative? Or are we trying to appeal to somebody who doesn't even go to the conventional potato chip section, and often buys impact-oriented products from the organic snacks section? That determines where you need to be.
As a founder of a small start-up food company, you should be able to articulate [positioning] to the retailer very clearly. If you have a coherent goal, like "I want to bring people who normally eat meat into a plant based foods,” for example, your ability to clearly articulate that to a retailer will give you credibility with that retailer. Then they are more likely to put you in the place where you want to be.
What is a good approach to promotion in retail stores?
Promotion strategy is important to think about. I've seen small companies start out with a pretty good pricing strategy, but when they get out to retailers, if the product isn't moving the way they thought, they start running too many promotions. Before you know it, you are losing money hand over fist because they over-promoted. The problem is that now, the consumer thinks their product is cheap. Founders need to think about the fact that they are training shoppers when they set prices. How you price a product trains the shopper as to what your brand is worth. If you have too many promotions, the consumer will believe that your product should always be on discount.
What are some strategies for package size?
I realize many start-ups are small operations, but if you have the opportunity to play with variations on your package size, I would definitely do that. Consider the way that competitor brands show up in a big club store—it is quite different from the way they show up in a small convenience store. Your ability to play with different package sizes means that you can use packaging to your advantage to hit key price points in different settings.
For instance, let’s say that you have determined that the price point that makes sense for your brand is $3.99. That is where you need to be to get a win for yourself, the consumer, and the retailer. But you’re finding that you financials don't really support that. Most companies would look to increasing the price point to $4.50. But I would say that your first move should actually be to decrease the size of your package so you can hit $3.99. You want to prioritize the price point and use smaller packages to your advantage.
What are retailers looking for and asking for in terms of product? What do they want to put on shelves right now?
You should network in the industry (with other companies who sell to those retailers) to gain insight on questions they've been asked during customer conversations. Certainly, all of [the retailers] care about making money. I coach founders to think about how they can make a retailer realize they will make money off their product. There are certain retailers who care about impact-oriented food brands because they know their shoppers care about it, but at the end of the day, they want to make money. You need to sell a profit story to them.
Looking ahead, especially considering an increased desire for impact-focused brands, will this continue to be a crowded space? And how can emerging food businesses navigate it?
As an investor, I absolutely feel that it is a crowded space. Some of that is driven by consumer preferences—more often, consumers want a product that fits their exact needs. As such, this space is going to continue to be crowded. The question is—how do you stand out? Using direct-to-consumer marketing (like Instagram) to build credibility and velocity helps. But you can also stand out by having a clear brand strategy that is differentiated, and really having your act together on these commercial elements—you know how you’re going to get this product to you retailer, you know how to price it and why, you have a promotions strategy, and (of course) your packaging looks amazing. All of that makes a really big difference when you are a small brand.